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Simulating with RICE Coalitionally Stable Burden Sharing Agreements for the Climate Change Problem

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  • Johan Eyckmans
  • Henry Tulkens

Abstract

In this paper we test empirically with the Nordhaus and Yang (1996) RICE model the core property of the transfer scheme adv ocated by Germain, Toint and Tulkens (1997). This scheme is designed to sustain full cooperation in a voluntary international environmental agreement by making all countries at least as well off as they would be by joining coalitions adopting emission abatement policies that maximize their coalition payoff; under the scheme no individual country, nor any subset of countries would have an interest in leaving the international environmental agreement. The simulations show that the transfer scheme yields an allocation in the core of the carbon emission abatement game associated with the RICE model. Finally, we discuss some practical implications of the transfer scheme for current climate negotiations.

Suggested Citation

  • Johan Eyckmans & Henry Tulkens, 1999. "Simulating with RICE Coalitionally Stable Burden Sharing Agreements for the Climate Change Problem," CESifo Working Paper Series 228, CESifo.
    • Handle: RePEc:ces:ceswps:_228
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    1. Parkash Chander & Henry Tulkens, 2006. "The Core of an Economy with Multilateral Environmental Externalities," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 153-175, Springer.
    2. TULKENS, Henry, 1997. "Cooperation vs. free riding in international environmental affairs: two approaches," LIDAM Discussion Papers CORE 1997052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-765, September.
    4. GERMAIN, Marc & TOINT, Philippe & TULKENS, Henry & DE ZEEUW, Aart, 1998. "Transfers to sustain core-theoretic cooperation in international stock pollutant control," LIDAM Discussion Papers CORE 1998032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Parkash Chander & Henry Tulkens, 2006. "A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 176-193, Springer.
    6. Nick Hanley & Henk Folmer (ed.), 1998. "Game Theory and the Environment," Books, Edward Elgar Publishing, number 1083.
    7. GERMAIN , Marc & TOINT , Philippe & TULKENS, Henry, 1997. "Financial transfers to ensure cooperative international optimality in stock pollutant abatement," LIDAM Discussion Papers CORE 1997001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Frederick Ploeg & Cees Withagen, 1991. "Pollution control and the Ramsey problem," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 1(2), pages 215-236, June.
    9. TULKENS, Henry, 1998. "Cooperation versus free-riding in international environmental affairs: two approaches," LIDAM Reprints CORE 1339, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Hoel, Michael, 1993. "Intertemporal properties of an international carbon tax," Resource and Energy Economics, Elsevier, vol. 15(1), pages 51-70, March.
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    Cited by:

    1. Johan Eyckmans & Michael Finus, 2006. "New roads to international environmental agreements: the case of global warming," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(4), pages 391-414, December.
    2. Uriel Spiegel & Uri Ben‐Zion & Tchai Tavor, 2006. "Profit Maximization And Social Optimum With Network Externality," Manchester School, University of Manchester, vol. 74(2), pages 138-155, March.
    3. Marc Germain & Philippe Toint & Henry Tulkens & Aart Zeeuw, 2006. "Transfers to Sustain Dynamic Core-Theoretic Cooperation in International Stock Pollutant Control," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 251-274, Springer.
    4. GERMAIN, Marc & VAN STEENBERGHE, Vincent, 2001. "Constraining equitable allocations of tradable greenhouse gases emission quotas by acceptability," LIDAM Discussion Papers CORE 2001005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Marrouch, W. & Ray Chaudhuri, A., 2011. "International Environmental Agreements in the Presence of Adaptation," Other publications TiSEM 247443ba-1022-47e0-9900-d, Tilburg University, School of Economics and Management.
    6. Paolo Buonanno & Carlo Carraro & Efrem Castelnuovo & Marzio Galeotti, 2001. "Emission Trading Restrictions with Endogenous Technological Change," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 1(3), pages 379-395, July.
    7. Inés Macho-Stadler & David Pérez-Castrillo & David Wettstein, 2004. "Sharing the surplus: A just and efficient proposal for environments with externalities," Working Papers 119, Barcelona School of Economics.
    8. Buonanno, Paolo & Carraro, Carlo & Galeotti, Marzio, 2003. "Endogenous induced technical change and the costs of Kyoto," Resource and Energy Economics, Elsevier, vol. 25(1), pages 11-34, February.
    9. Michael Finus & Ekko Ierland & Rob Dellink, 2006. "Stability of Climate Coalitions in a Cartel Formation Game," Economics of Governance, Springer, vol. 7(3), pages 271-291, August.
    10. Michèle Breton & Karima Fredj & Georges Zaccour, 2006. "International Cooperation, Coalitions Stability And Free Riding In A Game Of Pollution Control," Manchester School, University of Manchester, vol. 74(1), pages 103-122, January.
    11. Johan Eyckmans & Michael Finus, 2003. "Coalition Formation in a Global Warming Game: How the Design of Protocols Affects the Success of Environmental Treaty-Making," Energy, Transport and Environment Working Papers Series ete0317, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    12. Michael Finus & Bianca Rundshagen, 2003. "How the Rules of Coalition Formation Affect Stability of International Environmental Agreements," Working Papers 2003.62, Fondazione Eni Enrico Mattei.
    13. Carraro, Carlo & Bosello, Francesco & Buchner, Barbara & Raggi, Davide, 2003. "Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations," CEPR Discussion Papers 3606, C.E.P.R. Discussion Papers.

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